Rising home prices and low inventory led to a decline in foreign home purchases in the United States, World Property Journal has reported.
Total international sales totalled $121bn during April 2017 to March 2018, a 21 per cent decline from the previous 12-month period, according to an annual survey from the National Association of Realtors.
NAR’s 2018 Profile of International Transactions in US Residential Real Estate, found that foreign buyers and recent immigrants accounted for eight per cent of the $1.6tn existing home sales, a decrease from 10 per cent during the 12-month period that ended March 2017.
“After a surge in 2017, we saw a decrease in foreign activity in the housing market in the latest year, bringing us closer to the levels seen in 2016,” said Lawrence Yun, NAR chief economist.
“Inventory shortages continue to drive up prices and sustained job creation and historically low interest rates mean that foreign buyers are now competing with domestic residents for the same, limited supply of homes.”
Five countries accounted for nearly half (49 per cent) of the dollar volume of purchases by foreign buyers: China, Canada, India, Mexico and the United Kingdom. For the sixth consecutive year, China exceeded all other countries in dollar volume of purchases, buying an estimated $30.4bn worth of residential property, a decrease of four per cent from last year. Buyers from Canada came in second, with $10.5bn worth of property, showing a more significant decline of 45 per cent from the 2017 survey reference period, followed by the UK, $7.3bn, India, $7.2bn and Mexico, $4.2bn.
“The saying goes that all real estate is local, but that does not mean that all buyers are,” said NAR President Elizabeth Mendenhall. “Even in this current global environment of political uncertainty, the US real estate market continues to be seen as a safe, secure and profitable place to invest in property.”
The survey once again showed that foreign buying activity is mostly limited to three states, as Florida (19 per cent), California (14 per cent) and Texas (nine per cent) remained the top three destinations for foreign buyers to purchase, followed by Arizona and New York (both five per cent).
The number of units purchased by international buyers saw a slight decrease, from 284,000 in the previous 12-month period to 266,800. China, once again, purchased the greatest number of units at 40,400.